NJ Puts $10M in Federal COVID Funds Toward Foreclosure Prevention
TRENTON – The state is putting $10 million in federal COVID recovery funds toward a program designed to limit the number of single-family homes foreclosed and sold to rental property investment firms.
The money from the federal American Rescue Plan will be allocated to the state Housing and Mortgage Finance Agency to support the Foreclosure Prevention Act. The HMFA will use the money for supportive homeowner interventions and vacancy rehabilitation and sale.
“The Foreclosure Prevention Act was more than a decade in the making. My administration is proud to have signed this landmark legislation adding to our state’s capacity to address the concerns of current New Jersey homeowners and future homebuyers,” Gov. Phil Murphy said. “Today’s funding will permit this program to launch at scale and continue to grow.”
The state expects to use the money to buy mortgage loans in default from the Federal Housing Administration before they reach foreclosure proceedings. If the homeowner occupies the property, efforts will be made to assist him or her. If the property has been abandoned, steps will be taken to obtain title, complete any required rehabilitation and return the home to the single-family market.
The state said it is trying to head off a repeat of the loss of single-family homes available for purchase that was experienced after the 2008 financial crisis and Great Recession.
“Homeownership is the foundation for building intergenerational wealth and provides people long-term financial, mental and physical stability,” said Lt. Gov. Sheila Oliver, who chairs the HMFA board in her role as Department of Community Affairs commissioner.
“Helping homebuyers compete in this environment is imperative to long-term economic stability for New Jersey families and communities,” said Melanie Walter, the HMFA executive director. “This seed funding will help us play a key role in stabilizing the affordable single-family home market for New Jersey homeowners and homebuyers.”
According to ATTOM Data Solutions, New Jersey had the nation’s fifth-highest foreclosure rate among states in 2021, with foreclosure filings on 0.19% of housing units. The only states with higher rates were Nevada, Illinois, Florida and Delaware.
Within New Jersey, foreclosure filings were highest in the Atlantic City region at 0.29% of homes, according to ATTOM.
Fair Share Housing Center executive director Adam Gordon said the program can help address the state’s racial wealth gap, as minority homeowners are disproportionately impacted by foreclosure.
“The investment will also allow for the development of more affordable housing, which is especially critical as New Jersey continues to fall short in meeting our residents’ need for affordable homes,” Gordon said.